Married Without Means 2012 11

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Center for Economic and Policy Research

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Married without MeansPoverty and Economic Hardship Among Married Americans

Shawn Fremstad

November 2012


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CEPR Married without Means i

About the Authors

Shawn Fremstad is the Director of the Inclusive and Sustainable Economy Initiative at the Centerfor Economic and Policy Research in Washington, D.C.

Acknowledgements

The author thanks Dean Baker, Virginia Rutter, Arloc Sherman, Danilo Trisi, and Nicole Woo fortheir helpful comments.

Contents

Introduction ........................................................................................................................................................ 1

Marital Poverty Using the Federal Poverty Line ........................................................................................... 2Marital Poverty Using a Contemporary Poverty Line .................................................................................. 3

Contemporary Income Poverty Among Prime-Age Married Adults ......................................................... 5

Children and Poverty Risk ................................................................................................................................ 6

Limitations and Directions for Future Research ........................................................................................... 8

Conclusion ........................................................................................................................................................ 10

Appendix ........................................................................................................................................................... 11

Methodology for Contemporary Poverty Threshold ............................................................................ 11

Background on How the Federal Poverty Line has Defined Economic Deprivation Down ......... 11

References ......................................................................................................................................................... 15


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CEPR Married without Means 1

Introduction

More than 7 million married adults under age 65 in the United States have incomes below theaustere federal poverty linecurrently about $23,000 for a married couple with two children.Among parents living below the poverty line and caring for minor children, 43 percent are married(and not separated). There are more marriedparents with incomes below the poverty line than thereare never-married ones, and more food-insecure adults live in households with children headed bymarried couples than in ones headed by just a man or woman.

Yet, listening to policy elites, it would be easy to get the impression that poverty and economicdeprivation are ancient history for married Americansa major problem during the GreatDepression, but not during the Great Recession or the several decades of rising inequality thatpreceded it. As historian Stephanie Coontz has noted, today there is a sort of attitude magicalthinking, that if we get you married, then youll be fineand we dont have to worry about anti-poverty programs we dont have to worry about child care. 1 Scholars,

pundits and other policy elites need to end their magicalthinking about marriage and acknowledge the widespreadnature of marital poverty and economic hardship.2 Thisbrief takes an initial step toward doing this byhighlighting this neglected issue.

The invisibility of marital poverty is likely due in part tothe cultural and political idealization of marriage in theUnited States. The sociologist Andrew Cherlin prefacedhis recent book on the state of marriage in the UnitedStates with the observation that the United States is the

only Western country in which you will find billboardsand bus ads proclaiming that Marriage Works.3 If youhold up marriage as a cultural ideal, as even most youngpeople and non-married parents do, you may have a hardtime reconciling the cultural ideal of married bliss withthe reality that more than 7 million married Americanslive in poverty.

A second major factor contributing to the invisibility ofmarital poverty is our obsolete poverty line and overallapproach to measuring income poverty. In fact, as thisanalysis will show, if one updates the poverty line for increases in mainstream living standards overthe last half centuryan updating that still leaves it more than $10,000 below the amount mostAmericans think of as the minimum families need to make ends meetthe number of marriedparents in poverty increases by 78 percent, and about one out of every two parents in poverty aremarried.

1 Mehta (2005).2 I use policy elite here in the same way as Small et al. (2010).3 Cherlin (2009), p. 3.

Key Findings

More than 7 million married non-elderly adults have below-povertyincomes.

Among parents living below thepoverty line and caring for minorchildren, 43 percent are married.

Using a contemporary poverty linea conservative one equal to $33,686for a family of four13.5 millionmarried adults have below-povertyincomes, and half of parents living

below the poverty line and caring forminor children are married.

Among prime-age (30-49) parentsliving below the poverty line andcaring for minor children, 60 percentare married (and not separated).

Married adults who raise children are56 percent more likely to have below-poverty incomes than married adults

without children.


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Spotlighting marital poverty and hardship is in the interest of both progressives and conservatives.For progressives, spotlighting marital poverty can help make the case that economic hardship is notlimited to some group easily marginalized as other Americans, and that families of all shapes andsizes are in this together.

Conservatives who want to increase marriage rates through either publicly subsidized promotion ofmarriage or private collective action should be just as concerned about the invisibility of maritalpoverty. The idealization of marriage may be fine when a married couples finances and prospectsare for better. But this idealization may weaken marital bonds when a couples finances move inthe for worse direction. If a married couples income falls precipitously after a spouses job isoutsourced, their marriage may no longer live up to the idealized view that married people arentpoor.4Remembering the ad slogan on the bus shelter proclaiming that married people earn moremoney, they may be more likely to view their individual marriage as a failure since it hasntperformed as advertised.5

Why do so many married adults struggle to make ends meet in the United States? The problem is

mostly due to policy decisions that have allowed wages to stagnate and decline over time. Inaddition, despite the increase in womens employment over the last several decades, policymakershave yet to put in place a coordinated, comprehensive system of child care and early educationonethat makes quality care and early education a birthright for all childrenor adopt basic nationalstandards for paid family leave.

If we want to reduce marital poverty and hardshipand increase family economic securitygenerallyover the next two decades, we need to fix the economy by strengthening existing laborinstitutions, particularly unions, and creating new basic standards that apply nationwide, includingones for paid family leave. And, in the immediate short term, we need more public investment tocreate jobs and rebuild the economy. Finally, we need to strengthen existing, effective systems of

social protection, including Social Security and Medicaid, and overhaul ones that have completelyfailed struggling married parents, particularly Temporary Assistance for Families.

Marital Poverty Using the Federal Poverty Line

Table 1 shows the number of non-elderly adults with incomes below the federal poverty line bymarital status and presence of minor children in 2010. For a married couple with two minorchildren, the federal poverty line in 2010 was only $22,113. As this table shows, among adults withincomes below the poverty line who are caring for children, marriage is typical, not an exception.Nearly half (49 percent) are currently married, including 6 percent who are married but separated.6Only about 40 percent of non-elderly adults caring for minor children have never been married.

4 Tara Watson and Sara McLanahan (2011) have found that, for low-income men, the ratio between their income andthe income of fully employed men in their local reference group is a strong predictor of marital status. For low-income men, a 10 percent higher reference group income is associated with a 2 percent reduction in marriage.

5 For a copy of this ad, seehttp://www.marriageworksusa.com.6 Persons classified as separated in the CPS include those with legal separations, those living apart with intentions of

obtaining a divorce, and other persons permanently or temporarily estranged from their spouses because of maritaldiscord.
http://www.marriageworksusa.com/http://www.marriageworksusa.com/http://www.marriageworksusa.com/http://www.marriageworksusa.com/


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TABLE 1

Non-elderly Adults (18-64) Below Federal Poverty Line, by Marital Status and Presence of

Related Minor Children

Adults Caring for RelatedMinor Children

Adults Not Caring for RelatedMinor Children

Number(millions)

Percent ofTotal

Number(millions)

Percent ofTotal

Married 5068 43% 2362 16%

Married, but Separated 751 6% 716 5%

Widowed 235 2% 532 4%

Divorced 1226 10% 2633 18%

Never-Married 4614 39% 8120 57%

Total 11894 100% 14364 100%

Source: Authors calculations using Current Population Survey Annual Social and Economic

Supplement. Federal poverty line in 2010 was equal to $22,113 for a family of four.

Marital Poverty Using a Contemporary Poverty Line

The poverty threshold for the official measure was created in the early 1960s based on data from a1955 survey of consumption expenditures. Since then, it has been updated for inflation, but not forreal growth in the economy and mainstream living standards over the last half century. As aconsequence, to be counted as poor today according to the official poverty line, families need to be

considerably worse off compared to a typical American family than a poor family had to becompared to a typical family half a century ago.

The failure to update the poverty line over the last half century contributes to the invisibility ofmarital poverty. Using the obsolete official measure, many married couples are classified as non-poor today, even though they would have been classified as poor in previous decades.

Table 2 corrects for this problem by using a contemporary poverty line, one equal to roughly thesame percentage of median income as the federal poverty line when initially established. 7 Thisproduces a contemporary poverty line equal to $33,868 for a married couple with two children in2010.

The vast majority of Americans would agree that roughly $34,000 remains a conservative measure ofthe annual income needed to avoid povertythat is, to maintain a minimally decent living standardin todays economy.8 This can be shown by comparing it with responses to a 2007 Gallup survey,

7 The Appendix further explains why the current poverty line is obsolete as a measure of a minimally decent income,and how the contemporary poverty line used in this paper is constructed.

8 On the definition of poverty as not being able to afford a minimally decent standard of living, see Blank (2008)(living in poverty suggests that a family has so little income that they are unable to purchase the things that we as a


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which asked Americans to estimate the minimum amount of yearly income a family of four wou ldneed to get along in your local community.9 The average response was $52,087 and the median onewas $45,000, still $11,000 higher than the contemporary poverty threshold used here. Thecontemporary poverty line is also lower than the income cutoff for various means-tested publicassistance programs, such as the National School Lunch Program, which has an income limit for

reduced-price meals of $40,792 for a family of four.

TABLE 2

Non-elderly Adults (18-64) Below a Contemporary Poverty Line,

by Marital Status and Presence of Related Minor Children, 2010

Adults Caring forRelated Minor Children

Adults Not Caring forRelated Minor Children

Number(millions)

Percent ofTotal

Number(millions)

Percent ofTotal

Married 9015 49% 4540 24%


Widowed 329 2% 812 4%

Divorced 1752 10% 3444 18%

Never-Married 6203 34% 9218 49%

Total 18346 100% 18895 100%

Source: Authors calculations using Current Population Survey Annual Social andEconomic Supplement. Contemporary poverty line is equal to $33,868 in 2010 fora family of four.

Here, again, marriage is typical among non-elderly adults with children. More than half (55 percent)are currently married, including 6 percent who are married but separated. Only about one-third ofnon-elderly adults caring for minor children have never been married.

Figure 1 compares the number of non-elderly parents with below-poverty incomes in Table 1(federal poverty line) with the number with below-poverty incomes in Table 2 (contemporarypoverty line). The most striking difference is the very large increase in marital poverty when acontemporary poverty standard is used. Using the updated poverty standard, the number of marriedparents who are poor, increases by about 4.3 million, a 74 percent increase.

society think they need for a minimally decent life. In the United States, this typically means more than escapingstarvation; it means being able to purchase the goods and services that are necessary to afford adequate and stablehousing, find and hold a job, participate as a citizen in the community, keep oneself and ones family reasonablyhealthy, and provide the things that ones children need to participate effectively in school.).

9 Jones (2007).


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FIGURE 1

Number of Non-elderly Adults with Below-Poverty Income who are Caring for Children, by Marital Status

and Federal vs. Contemporary Poverty Line

Source: Authors calculations using Current Population Survey Annual Social and Economic Supplement.

Contemporary poverty line is equal to $33,868 in 2010 for a family of four.

Contemporary Income Poverty Among Prime-Age

Married Adults

To further understand marital poverty, it may be useful to look at the group Charles Murray definesas prime-age adults: people who are no younger than thirty and no older than forty-nine. AsMurray has explained, this allows us to focus on adults in the prime of life, with their educations

usually completed, engaged in careers and raising families. People in their twenties and fifties are indecades of transition.10

AsTable 3 shows, there were 9.5 million prime-age parents with incomes below the contemporarypoverty line in 2010. Of these parents, 5.7 million, nearly six out of every ten were married. Addingin parents who are married but separated brings the marital poverty share up to two out of everythree prime-age parents. By contrast, only about one in five had never been married.

10 Murray (2012), p. 147.

5068

751

1461

4614

9015

1049

2081

6203

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000

Married

Married but Separated

Divorced or Widowed

Never-Married

Adults (18-64) with Below-Poverty Incomes who are Caring for Related Minor Children(Number in Thousands)

Below ContemporaryPoverty Line

Below Federal PovertyLine


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TABLE 3

Prime-Age Adults (30-49) Below a Contemporary Poverty Line, by Marital

Status and Presence of Related Minor Children, 2010

Adults Caring for

Related Minor Children

Adults Not Caring for

Related No Children

Number(millions)

Percent ofTotal

Number(millions)

Percent ofTotal

Married 5741 60% 1320 23%


Widowed 148 2% 141 2%

Divorced 1198 13% 1,125 20%

Never-Married 1,764 19% 2736 48%

Total 9,530 100% 5728 100%

Source: Authors calculations using Current Population Survey Annual Social and

Economic Supplement. Contemporary poverty line is equal to $33,868 in 2010 fora family of four.

Among the smaller group of prime-age adults who are not living with related children, nearly half(48 percent) have never been married. Still, three out of ten (30 percent) are either married (23percent) or married, but separated (7.1 percent), and just over one in five had been married (but arenow divorced or widowed).

Children and Poverty Risk

As researchers have found, motherhood is central to contemporary gendered expectations forwomen and the cultural expectation to bear and rear children is so strong that parenthood appearsnormative and childlessness deviant.11 Thus, it is no surprise that most prime-age adults are raisingchildren. Yet, despite the seemingly normative status of parenthood, prime-age adults who havechildren face much greater poverty risks than those who do not.

AsTable 4 shows, among married prime-age adults, those caring for children are 56 percent more

likely to be living below the contemporary poverty line than those who are not caring for children.Similarly, in each of the remaining marital status categories, prime-age adults caring for children aremuch more likely to live below the contemporary poverty line than adults with the same maritalstatus who do not have children.

11 See McQuillan et al (2008).


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TABLE 4

Prime-Age Adults (30-49) Caring for Children Have Higher Poverty Rates

umber of Prime-AgeAdults Below

ontemporary Povertyine who are Caring forhildren (thousands)

Contemporary Poverty Rate

of Adults

Percentage Increase inPoverty Risk forAdults Caring for

Children Compared toAdults with SameMarital Status who areNot Caring forChildren

Not Caring forRelated MinorChildren

Caring forRelated MinorChildren

All Prime-Age Adults 9531 16.5% 20.1% 21%

By Marital Status

Married 5741 9.7% 15.1% 56%

Married But Separated 680 29.2% 53% 82%

Widowed 148 33.1% 42.5% 28%

Divorced 1198 19.5% 32.2% 65%Never Married 1764 20.3% 43.2% 112%

Source: Authors calculations using Current Population Survey Annual Social and Economic Supplement.Contemporary poverty line is equal to $33,868 in 2010 for a family of four.

Not surprisingly, divorced parents (who have not remarried) have higher poverty rates than currentlymarried parents. However, there is not much difference in the impact that caring for a child has ontheir respective risks of living in poverty (56 percent increase in poverty risk for married parentscompared to a 65 percent increase for divorced ones). And divorced parents caring for children havelower poverty rates and less poverty risk associated with children than married but separated parentsand never married ones.

About 41 percent of married prime-age parents living below the poverty line are Latinos, a groupdisproportionately employed in poorly compensated jobs. Divorced parents are mostly non-Latinoand white. For them, the strengthening of child support norms and enforcement, as well as gains inpay equity and womens employment over time, have probably helped lower the poverty riskassociated with raising children.

Figure 2 below is a bubble chart that displays, by marital status, the number of prime-age adultswith below-poverty incomes who are caring for children (the first data column in table 4), thepoverty rate for prime-age adults caring for children (the third data column), and the increase inpoverty risk associated with caring for children (the fourth data column).


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FIGURE 2

Prime-Age Parents with Below-Poverty IncomesNumber, Poverty Rate, and Poverty Risk Associated with

Having Children by Marital Status, 2010

Source: Authors calculations using Current Population Survey Annual Social and Economic Supplement.Contemporary poverty line is equal to $33,868 in 2010 for a family of four.

Limitations and Directions for Future Research

There are at least three limitations with the approach used here to quantify marital poverty andhardship.

First, it does not address the considerable bias introduced by treating unmarried couples who areliving together and sharing expenses as two separate family units. Currently, the federal poverty

measure only accounts for marital status and not for partnership status, even among unmarriedcouples who have children in common. Ideally, unmarried couples who share expenses would havetheir own status in this analysis.12 If they did, the numbers of divorced, separated, widowed, andnever married adults with incomes below the poverty line would decline, and the number of coupled

12 Research finds that cohabiting-parent households do generally pool resources, although at a slightly lower rate thanmarried ones. See Kenney (2004) and Provencher (2011). Cohabitation is now the modal path to marriagein the2000s, 67 percent of women cohabitated before their first marriage. And recent couples who cohabit before marriageare no more likely to experience marital instability than those who do not. Manning and Cohen (2012).

Married5.74

Never Married1.76

Married butSeparated

0.68

Widowed0.15

Divorced1.2

0%

20%

40%

60%

80%

100%

120%

140%

0% 10% 20% 30% 40% 50% 60% 70%

Percentage

Increase

in

Poverty

Rate

for

Prime-

Age

Adu

lts

Ra

ising

Children

Compare

dtothosew

ithSame

Marita

lStatus

but

Not

Ra

ising

Children

Poverty Rate for Prime-Age Adults Caring for Children

Bubble area is proportionalto number of prime-ageadults below poverty lineand each bubble is labeledwith number in millions.


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adults in poverty would increase. Currently, about 2.8 million parents in unmarried couples withincomes under $40,000 have one or more joint children, so even just taking this group into accountwould make a significant difference.13

Second, I use the same income definition (pre-tax, money income) as the federal poverty measure.

This has the effect of excluding some resources, such as the Earned Income Tax Credit, that shouldarguably be counted as income, while not subtracting some expenses, such as payroll taxes, thatshould arguably be excluded.

Third, the analysis is limited to income poverty. It would also be helpful to look at various directmeasures of economic hardship, including food insecurity. Looking simply at USDAs publishedtables on food insecurity, it appears that among households that include minor children, about 7.1million adults in married couples lived in food-insecure households compared 4.3 million unmarriedmale or female households heads.14

I hope to address these limitations in future analyses, but for the time being let them stand in theinterests of simplicity and making a straightforward and conservative comparison with the official

poverty statistics.

In future research, it would also be useful to track marital poverty trends over time. In doing so, itwould make sense to use both the contemporary poverty measure used here and a measure that isanchored at median income in a base year and then only adjusted for price changes for a period oftime (to avoid obsolescence, no more than 10 to 20 years at most). This two-measure approachwould be similar to that used by the Pew Foundations Economic Mobility Project to measurechanges in economic mobility over time.

Finally, it would also be interesting to examine geographic variation in marital poverty. In RedFamilies v. Blue Families: Legal Polarization and the Creation of Culture, Naomi Cahn and June Carbone,

use geography as an organizing theme in an effort to capture the relationship between differentfamily patterns and different political and ideological packages.15 They find that the demographicstory is overwhelmingly about the age at family formation. According to Cahn and Carbone:

The reddest areas of the country, both in terms of their politics and the lives of theirfamilies, marry and have children at younger ages and are most likely to see the embrace oftraditional values as critical to community well-being. The bluest areas of the country, andparticularly the urban Northeast, have the highest average ages of family formation anddemonstrate the greatest support for mechanisms that effectively deter teen birth.

A quick comparison of marital poverty statistics for a prototypical red state (Texas) and a

prototypical blue one (Massachusetts) suggests that geographic differences in culture and economicsplay a similar role here. Texas has a relatively high poverty rate (17.9 percent in 2010), while

13 Authors calculation from Americas Families and Living Arrangements, Tables FG1 and FG5, accessed on October30, 2012 athttp://www.census.gov/hhes/families/data/cps2011.html.

14 Authors calculations from Table 2, Household Food Security in the United States, ERR-141, Economic ResearchService/USDA. The source for Table 2 was the December 2011 Current Population Survey Food SecuritySupplement. A household is considered food insecure if, at least some time during the year, the food intake of one ormore household members is reduced and their eating patterns disrupted due to a lack of resources to obtain food.

15 Cahn and Carbone (2010).
http://www.census.gov/hhes/families/data/cps2011.htmlhttp://www.census.gov/hhes/families/data/cps2011.htmlhttp://www.census.gov/hhes/families/data/cps2011.htmlhttp://www.census.gov/hhes/families/data/cps2011.html


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Massachusetts has a relative low rate (11.4 percent). Parents with below-poverty incomes in Texasare significantly more likely to be married in Texas than in Massachusetts, and married parentscaring for minor children have much higher poverty rates in Texas than in Massachusetts.16

ConclusionMost parents with below-poverty incomes who are raising minor children are married. The failure ofmany policy elites to recognize the extent of marital poverty covers up the profound economicstruggles of millions of married parents. To reduce marital poverty and hardshipand increaseeconomic security for families of all typespolicy makers need to expand and strengthen labormarket institutions as well as universal systems of social protection against economic risks, and makequality child care and early education a birthright for all children.

16 Similarly, in a recently published paper, Kearney and Levine (2012) find that state-level income inequality, measuredusing the 50-10 income ratio, explains a sizable share of the geographic variation in teen birth rates. The highinequality/high teen birth states are mostly red states (including Texas with the second highest teen birth rate in theUnited States, while the low-inequality/low-teen-birth states are mostly blue ones (including Massachusetts with thethird lowest teen birth rate).


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Appendix

Methodology for Contemporary Poverty Threshold

The contemporary poverty threshold used in this paper is set at nearly the same level of medianfamily income in 2010 as the official one was in 1959. I use conservative and transparentassumptions to construct the contemporary thresholds. Specifically, I anchor the threshold to apercentage of median rather than average income. While the base-1959 poverty threshold in 1959was equivalent to 53.2 percent of median income, I round down, setting the contemporary thresholdat 50 percent of median family income (as a result, the 2010 contemporary threshold is about $1,200lower for an individual than it would be if I had used the exact 1959 equivalent).

To adjust for family size, I use a standard equivalence scale that divides household income by thesquare root of family size. So, for example, a family of four is assumed to need an income that isonly twice as large as one composed of a single person. For certain family types, including single-

parent families and families with children or people with disabilities there are strong arguments forusing equivalence factors that assume lesser economies of scale than this approach. But in this initialpaper, I want to establish a conservative baseline using simple and transparent methods.

Both the official poverty statistics and the contemporary poverty statistics in this paper werecalculated using the Census Bureaus CPS Table Creator athttp://www.census.gov/cps/data/cpstablecreator.html.

Background on How the Federal Poverty Line has Defined Economic Deprivation

Down

The poverty threshold for the official poverty measure was created in the early 1960s based on data

from a 1955 survey of consumption expenditures. Official poverty data using this threshold starts in1959 with a poverty threshold that is equal to about half of family income (53.2 percent of medianand 48.2 percent of average, both equivalised for family size). Today, even with declines in medianfamily incomes in recent years, it has fallen to one-third (33.5 percent) of median family income.Moreover, as a result of increasing inequality, driven mostly by outside increases in incomes for theelite, it has fallen to only one-fourth (25.8 percent) of average family income.

In essence, the federal governments half-century-long failure to update the official poverty measurehas defined economic deprivation down. To be counted as poor today, a family needs to beconsiderably worse off compared to a typical American family than a family half a century ago.Figure A1 charts how the official poverty measure has defined economic deprivation down since

1959. It compares the official poverty measure with two contemporary poverty measures that defineeconomic deprivation consistently over time. The first has been adjusted to maintain the same levelas a percentage of median family income as it had when it was set in the early 1960s. The second hasbeen adjusted to maintain the same level as a percentage of average family income. To avoidconfusion in this appendix, I will refer to the official poverty measure as a base-1959 povertymeasure and to measures that maintain the same level of deprivation over time as contemporarypoverty measures, anchored to the same percentage of either median or mean income.


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FIGURE A1

The Base-1959 Official Poverty Measure Defines Deprivation Down Compared to Contemporary

MeasuresPoverty Lines for One Person

Source: Authors calculations using Current Population Survey.

As figure A1 shows, the contemporary poverty threshold (tracking half of median incomes overtime) for one person in 2010 was equal to about $18,000, an amount equal to approximately 150percent of the base-1959 poverty threshold. The vast majority of Americans would agree that this is

a very conservative measure of the annual income needed to maintain a minimally decent livingstandard in todays economy.

Figure A2 below compares the base-1959 measure with contemporary measures for a family of fourand responses to a Gallup survey, which asked Americans to estimate the minimum amount ofyearly income a family of four would need to get along in your local community.17 The averageresponse was $52,087 and the median one was $45,000, still $11,000 higher than the contemporarypoverty threshold (median anchored) for a family of two adults and two children in 2010 of $33,868.

17 Jones (2007).

$11,344

$18,002

$21,971

$-

$5,000

$10,000

$15,000

$20,000

$25,000Base-1959 Poverty Line

Contemporary Poverty Line-MedianIncome Base

Contemporary Poverty Line-AverageIncome Base


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FIGURE A2

Minimum Income Standards for a Family of Four in 2010

Sources: Authors calculations using Current Population Survey; Gallup (2007); Commerce Department, andUSDA. Gallup figures are for 2007.

The rationale for this sort of contemporary threshold of minimum income adequacy, instead of thecurrent base-1959-measure, is straightforward and should be uncontroversial.18 In The Wealth of

Nations, Adam Smith defined poverty in terms of what the custom of the country required people,even of the lowest order, to have for a minimally decent standard of living. As Figure A2 shows, acontemporary poverty standard better reflects public opinion on what the custom of the countryrequires than does the federal poverty threshold.

Similarly, echoing Smith, Ron Haskins and Isabel Sawhill explain that: 19

relative poverty [a contemporary measure] is a better measure of individual well-being than absolute poverty [a measure set to living standards in some base year, andadjusted only for inflation since then], because social context and community norms

18 Of course, poverty measurement is a highly politicized area in the United States. This is likely due in large part to theuse of the label poverty and the outdated idea that poverty can be best measured with a single income-basedmeasure. For thoughts on an alternative approach, see Fremstad (2010a).

19 Haskins and Sawhill (2009), p. 37. Although the terms relative and absolute are commonly used in academicliterature, I avoid them here because they are imprecise and misleading descriptors. The current federal povertymeasure is commonly described as an absolute poverty measure, even through it was initially set in an explicitlyrelative fashion (specifically relative to consumption expenditures in 1955). As a practical matter, its hard toimagine a meaningful income poverty measure in a wealthy nation that isnt relative to something. And the popularand political connotations of the terms absolute and relative have little in common with their meaning in technical,academic literature.

$22,113

$33,868

$40,792$43,943 $45,000

$51,500 $52,000

Federal (Base-1959) Poverty

Threshold

ContemporaryPoverty

Threshold-Halfof Median

Income in 2010

IncomeThreshold forReduced-PriceSchool Lunch

ContemporaryPoverty

Threshold-Halfof Mean

Income in 2010

Public Estimateof Minimum

IncomeNeeded-Median

CommerceDepartmentEstimate ofMinimum

"Middle-Class"Budget

Public Estimateof Minimum

IncomeNeeded-Mean


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about what it means to be poor change over time, implying that the poverty lineshould be adjusted as economic growth makes everyone better off. ...

On the fringes, some libertarian economists have argued that the base-1959 poverty measure ismuch too high because the Consumer Price Index (which is used to adjust the measure) doesnt take

into account technological and other innovations, such as dishwashers, air conditioning, andcomputers.20 Their argument is an interesting ivory tower one, mainly because, if applied consistentlyto both the rich and poor, it would mean that todays rich havent just got a lot richer, butfantabulously richeras a class in a way that goes beyond the wildest imagination of most rich peoplefifty years ago. This would further strengthen the case for returning to the historically high 1950s-eramarginal tax rates on the current rich. But this approach also produces a poverty threshold ofaround $10,000 for a married couple with children, an amount that is completely lacking in any real-world plausibility, and the proponents of this theory make no attempt to provide one.21

20 For more on this approach and a more detailed critique of it, see Fremstad (2010b).21 Ibid.


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References

Blank, Rebecca. 2008. Presidential Address: How to Improve Poverty Measurement in the UnitedStates. Journal of Policy Analysis and Management,vol. 27, no. 2, pp. 233-254.

Cahn, Naomi and June Carbone. 2010. Red Families v. Blue Families: Legal Polarization and the Creation ofCulture. New York: Oxford University Press.

Cherlin, Andrew J. 2009. The MarriageGo-Round: The State of Marriage and the Family in America Today.New York: Vintage Books.

Fremstad, Shawn. 2010a. A Modern Framework for Measuring Poverty and Basic EconomicSecurity.Washington, DC: Center for Economic and Policy Research.http://www.cepr.net/documents/publications/poverty-2010-04.pdf

. 2010b, Income Inequality, and Food Prices.Washington, DC: Center for Economic and

Policy Research.http://www.cepr.net/documents/publications/poverty-2010-12.pdf

Haskins, Ron and Isabel Sawhill. 2009. Creating an Opportunity Society. Washington, DC: BrookingsInstitution Press.

Jones, Jeffrey. 2007. Public: Family of Four Needs to Earn an Average of $52,000 to Get By,Gallup, February 9. http://www.gallup.com/poll/26467/public-family-four-needs-earn-average-52000-get.aspx

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